<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                               __________________

                                    FORM 10-Q

                                   (MARK ONE)

 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                   ACT OF 1934
                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002

                                       OR

     [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
               FOR THE TRANSITION PERIOD FROM ________ TO ________

                        COMMISSION FILE NUMBER 333-21411
                        ________________________________


                               ROSE HILLS COMPANY
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


                     DELAWARE                               13-3915765
         (STATE OR OTHER JURISDICTION OF                 (I.R.S. EMPLOYER
         INCORPORATION OR ORGANIZATION)                 IDENTIFICATION NO.)

                          3888 SOUTH WORKMAN MILL ROAD
                           WHITTIER, CALIFORNIA 90601
               (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

                                 (562) 692-1212
               REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE

                                       N/A
   (FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
                                     REPORT)

                               __________________


   Indicate by check [X] whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [x] No [_]

      The number of outstanding common shares as of May 14, 2002 was 1,000.

<PAGE>

                       ROSE HILLS COMPANY AND SUBSIDIARIES
            (A WHOLLY-OWNED SUBSIDIARY OF ROSE HILLS HOLDINGS CORP.)

<TABLE>
<CAPTION>
                                                                                            PAGE
<S>                                                                                      <C>
PART I. FINANCIAL INFORMATION

     ITEM 1.  FINANCIAL STATEMENTS (UNAUDITED):

       CONDENSED CONSOLIDATED BALANCE SHEETS
         as of March 31, 2002 and December 31, 2001                                            1

       CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
         for the Three Months Ended March 31, 2002 and 2001                                    2

       CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS for the Three Months Ended March
         31, 2002 and 2001                                                                     3

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                                4 - 7

     ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
       CONDITION AND RESULTS OF OPERATIONS                                                7 - 14

     ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                      14

PART II. OTHER INFORMATION

     ITEM 5    OTHER INFORMATION                                                         14 - 17

     ITEM 6    EXHIBITS AND REPORTS ON FORM 8-K                                               17

     SIGNATURES                                                                               17
</TABLE>

<PAGE>


                       ROSE HILLS COMPANY AND SUBSIDIARIES
            (A Wholly-Owned Subsidiary of Rose Hills Holdings Corp.)
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                   AS OF DECEMBER 31, 2001 AND MARCH 31, 2002
                      (In thousands, except share amounts)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                      ASSETS
                                                                         Successor   Successor
                                                                            2001       2002
                                                                          --------   --------
<S>                                                                       <C>        <C>
Current assets:
 Cash and equivalents                                                     $  7,639   $ 10,179
 Accounts receivable, net of allowances                                     12,810     10,154
 Inventories                                                                   939        963
 Prepaid expenses and other current assets                                     738        967
                                                                          --------   --------

   Total current assets                                                     22,126     22,263
                                                                          --------   --------

Long-term receivables, net of allowances                                   182,472    185,213
Cemetery property, at cost                                                  36,078     36,409
Property and equipment, net                                                 83,774     83,148
Deferred tax asset                                                           3,505      3,076
Goodwill                                                                    67,385     67,385
Receivables from service trusts                                              7,942      7,900
Other assets                                                                 2,535      2,672
                                                                          --------   --------

   Total assets                                                           $405,817   $408,066
                                                                          ========   ========

                       LIABILITIES AND STOCKHOLDER'S EQUITY

Current liabilities:
 Accounts payable and accrued liabilities                                 $ 13,030   $ 11,670
 Current portion of long-term debt                                           9,698      9,709
                                                                          --------   --------
      Total current liabilities                                             22,728     21,379

Retirement plan liabilities                                                  6,816      6,797
Subordinated notes payable                                                  76,800     77,036
Bank senior-term loan                                                       52,642     52,642
Other long-term debt                                                           979        790
Other liabilities                                                               50         50
Deferred pre-need funeral contract revenue                                 172,055    174,841
Deferred pre-need cemetery contract revenue                                  8,866      8,980
                                                                          --------   --------
      Total liabilities                                                    318,208    321,136

Commitment and contingencies

 Stockholder's equity:
  Common stock, par value $.01; Authorized and outstanding 1,000 shares         --         --
  Additional paid in capital                                                64,881     64,881
  Retained earnings                                                             --        670
                                                                          --------   --------
     Total stockholder's equity                                             64,881     65,551
                                                                          --------   --------

 Total liabilities and stockholder's equity                               $405,817   $408,066
                                                                          ========   ========
</TABLE>

      See accompanying condensed notes to unaudited condensed consolidated
                             financial statements.

                                        1

<PAGE>

                       ROSE HILLS COMPANY AND SUBSIDIARIES
            (A Wholly-Owned Subsidiary of Rose Hills Holdings Corp.)
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (In thousands)
                                   (UNAUDITED)

                                                          Three Months Ended
                                                          ------------------
                                                                March 31
                                                                --------
                                                       Predecessor     Successor
                                                           2001          2002
                                                         --------      --------

Sales and services:
  Funeral sales and services                             $  9,165      $  8,491
  Cemetery sales and services                               9,050         9,553
                                                         --------      --------

     Total sales and services                              18,215        18,044
                                                         --------      --------


Cost of sales and services:
  Funeral sales and services                                6,428         5,722
  Cemetery sales and services                               7,627         7,350
                                                         --------      --------

     Total costs of sales and services                     14,055        13,072
                                                         --------      --------

   Gross profit                                             4,160         4,972

General and administrative expenses                         1,566         1,647
Amortization of purchase price in excess of
      net assets acquired and other intangibles               924            20
                                                         --------      --------

   Income from operations                                   1,670         3,305

Other income (expense):
   Interest expense                                        (3,894)       (2,932)
   Finance and interest income                                749           726
                                                         --------      --------

   Total other expense, net                                (3,145)       (2,206)

   (Loss) income before income tax                         (1,475)        1,099

Income tax (benefit) expense                                 (634)          429
                                                         --------      --------

Net (loss) income                                        $   (841)     $    670
                                                         ========      ========

      See accompanying condensed notes to unaudited condensed consolidated
                             financial statements.

                                        2

<PAGE>

                       ROSE HILLS COMPANY AND SUBSIDIARIES
            (A Wholly-Owned Subsidiary of Rose Hills Holdings Corp.)
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                 Three Months
                                                                                                     Ended
                                                                                                    March 31
                                                                                            Predecessor   Successor
                                                                                                2001        2002
                                                                                              --------    --------
<S>                                                                                           <C>         <C>
Cash flows from operating activities:
  Net (loss) income                                                                           $   (841)   $    670
  Adjustments to reconcile net (loss) income to net cash provided by operating activities:
     Depreciation and amortization                                                               1,929         957
     Amortization of deferred finance cost                                                         407          --
     Amortization of subordinated notes discount                                                    --         237
     Amortization of cemetery property                                                             694         481
     Provision for bad debts and sales cancellation                                                209         436
     Provision for deferred taxes                                                                   --         429
     Gain from disposal of property and equipment                                                   --          (8)
  Changes in assets and liabilities:
     Accounts receivable                                                                         2,768       2,000
     Prearranged funeral contracts receivable                                                       --      (2,741)
     Inventories                                                                                   (51)        (24)
     Prepaid expenses and other current assets                                                      83        (230)
     Accounts payable and accrued expenses                                                         116      (1,360)
     Retirement plan liabilities                                                                   (28)        (20)
     Net deferred revenue                                                                         (687)      2,901
     Other assets and liabilities, net                                                            (170)       (115)
                                                                                              --------    --------
       Net cash provided by operating activities                                                 4,429       3,613
                                                                                              --------    --------

Cash flows from investing activities:
  Capital expenditures                                                                          (1,126)       (894)
                                                                                              --------    --------
        Net cash used in investing activities                                                   (1,126)       (894)
                                                                                              --------    --------

Cash flows from financing activities:
   Principal payments of capital lease obligations                                                (194)       (104)
   Decrease in other long term debt                                                                (41)        (75)
                                                                                              --------    --------
        Net cash used in financing activities                                                     (235)       (179)
                                                                                              --------    --------

        Net increase in cash and cash equivalents                                                3,068       2,540

Cash and cash equivalents at beginning of period                                                 8,171       7,639
                                                                                              --------    --------
Cash and cash equivalents at end of period                                                    $ 11,239    $ 10,179
                                                                                              ========    ========
Supplemental disclosure of cash flow information:
    Cash paid during the period for:
      Interest                                                                                $  1,704    $    966
</TABLE>

      See accompanying condensed notes to unaudited condensed consolidated
                             financial statements.

                                        3

<PAGE>

                       ROSE HILLS COMPANY AND SUBSIDIARIES
            (A Wholly-Owned Subsidiary of Rose Hills Holdings Corp.)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1. BASIS OF PRESENTATION

     The accompanying March 31, 2002 interim condensed consolidated financial
statements of Rose Hills Company and subsidiaries (the "Company") have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial reporting and with the
instructions to Article 10 of Regulation S-X. Accordingly, they do not include
all of the information and footnote disclosures necessary for complete financial
statements in conformity with accounting principles generally accepted in the
United States of America. In the opinion of management, the accompanying interim
consolidated financial statements contain all adjustments (consisting of normal
recurring accruals and adjustments) considered necessary for a fair presentation
of the financial condition, condensed results of operations and cash flows for
the periods presented. These unaudited condensed consolidated financial
statements should be read in conjunction with the audited consolidated financial
statements included in the Company's annual report on Form 10-K for the year
ended December 31, 2001.

     The Company, a Delaware corporation, is a wholly owned subsidiary of Rose
Hills Holdings Corp. ("RH Holdings"). The Company was formed in 1996 for
purposes of acquiring Roses, Inc., the owner and operator of the Rose Hills
Mortuary and purchasing certain assets and assuming certain liabilities of Rose
Hills Memorial Park Association (the "Association") and Workman Mill Company,
the owners of the real property and other cemetery assets of the Rose Hills
Memorial Park (Rose Hills Cemetery).

     In April 2001, the shareholders of RH Holdings reached an agreement
("Loewen Blackstone Settlement Agreement") pursuant to which Blackstone Capital
Partners II Merchant Banking Fund L.P. and its affiliates (collectively
"Blackstone"), then the beneficial owner of 80.55% of the outstanding common
stock of the Company, would exercise its put right and the minority shareholder,
a reorganized Loewen Group International, Inc. ("Loewen"), would acquire all of
the stock of RH Holdings owned by Blackstone upon Loewen's emergence from
bankruptcy. The U.S. Bankruptcy Court confirmed Loewen's reorganization plan,
including the proposed acquisition of shares of RH Holdings from Blackstone on
December 5, 2001, and the plan became effective on January 2, 2002. Effective
with its emergence from bankruptcy, Loewen has since been renamed the Alderwoods
Group, Inc. ("Alderwoods"). Since the U.S. Bankruptcy Court approved the
reorganization plan on December 5, 2001, such approval effectively obligated
Blackstone and Loewen to consummate the put agreement. Accordingly, the Company
has recorded this transaction effective on December 31, 2001.

     On January 3, 2002, in full satisfaction of its obligations under the put
arrangement, Alderwoods delivered to Blackstone unsecured, subordinated notes in
the aggregate principal amount of $24,678,571 and Alderwoods common stock with
an aggregate value of $6,515,143. As a result of the delivery of the
consideration, Alderwoods completed its purchase of all of the stock of RH
Holdings beneficially owned by Blackstone. Upon closing of the transaction
("Alderwoods Purchase Transaction"), Alderwoods increased its ownership from
20.45% to 100% of the outstanding common stock of RH Holdings, thereby causing
the Company to become a wholly owned subsidiary of Alderwoods. The shareholders
agreement, and all other agreements, between Alderwoods and Blackstone with
respect to the Company terminated as of the closing of the transaction, and
Alderwoods became entitled to elect all of the directors of the Company as of
such date.

     For accounting purposes, the effective date for the change in control has
been determined by the Company as December 31, 2001. This is based upon the fact
that the U.S. Bankruptcy Court confirmed Loewen's reorganization plan, including
the proposed acquisition of the shares of RH Holdings from Blackstone on
December 5, 2001. Thus, Blackstone and Loewen were obligated under the put.
Accordingly, the Company recorded the push-down of Loewen's fresh start
reporting in its Successor consolidated balance sheet as of December 31, 2001.

                                        4

<PAGE>

     Since the Company has pushed-down the fresh start reporting that occurred
as a result of Loewen's purchase of Blackstone's interest in the Company, the
Company's Successor statement of operations and statement of cash flows for the
three months ended March 31, 2002 are presented on a different cost basis than
the Predecessor statement of operations and statement of cash flows for the
three months ended March 31, 2001. Therefore, such statements are not
comparable.

     The Company operates 10 funeral homes, 3 funeral home and cemetery
combination properties and 1 cemetery property in the Southern California area.
The Company offers cemetery interment and professional mortuary services, in
addition to caskets, memorials, vaults, and flowers for sale on an at-need
basis. Pre-need funeral and cemetery products and services are offered on
insurance contracts from which the Company earns commission.

     The accounting and reporting policies of the Company conform to accounting
principles generally accepted in the United States of America and the prevailing
practices within the cemetery and mortuary industry. All significant
intercompany accounts and transactions have been eliminated.

 Reclassification

     Certain reclassifications have been made to the 2001 consolidated financial
statements to conform to the 2002 presentation.

2. CRITICAL ACCOUNTING POLICIES

Cemetery Revenue Recognition

     Pre-need sales of cemetery interment rights are recognized in accordance
with the guidance of Statement of Financial Accounting Standards (SFAS) No.66,
Accounting for the Sales of Real Estate. Accordingly, sales of interment rights
are recognized under the full accrual method, the percentage of completion
method, or the deposit method depending on the level of the buyer's down payment
and any continuing involvement the Company has in developing sold property.
Direct and acquisition costs of the sales are deferred and recognized concurrent
with the recognition of deferred sales. Deferred sales are recognized at the
time of delivery of merchandise or performance of service.

     Allowances for anticipated customer cancellations and refunds are provided
at the date of sale based on management's estimate of expected cancellations
using historical trends. Actual cancellation rates in the future may result in a
change in estimate.

     Deferred merchandise and service sales, and their direct costs, are
recognized at the time of delivery of merchandise or performance of service.

     At-need sales of cemetery interment rights, merchandise and services are
recognized when the merchandise is delivered or the service is rendered.

     A portion of the proceeds from the sale of interment rights is required by
state law to be paid into an Endowment Care Fund to provide for the perpetual
care of the associated properties. Cemetery revenue is recorded net of these
amounts. Earnings of the Endowment Care Fund are used to defray the maintenance
costs of cemeteries. Additionally, pursuant to state law, the proceeds from the
sale of pre-need merchandise and services may also be required to be paid into
trust funds.

     It is the Company's policy to voluntarily trust 100% of pre-need service
revenue when contracts are paid in full. Also, the Company has an agreement with
a vendor to purchase pre-need merchandise when the sales contracts are paid in
full. Funds voluntarily trusted for pre-need cemetery services are included in
the consolidated financial statements.

                                        5

<PAGE>

Funeral Revenue Recognition

     Pre-arranged funeral services contracts provide for future funeral
services and are generally determined by prices prevailing at the time the
contract is signed. The payments made under the contract are either placed in
trust or are used to pay the premiums of third-party life insurance policies
under which the Company will be designated as beneficiary. The pre-need funeral
insurance policies sold by the Company are whole-life policies sold on a
pre-need basis to pay for the cost of funeral services. Commissions earned are
based on a combination of factors, such as the amount of funeral cost coverage
sold, the age of the insured and the volume of monthly sales activity. Insurance
commissions earned and related selling expenses are recognized when the
insurance company accepts the policies. Except for insurance commissions and
amounts not required to be trusted, which are used to defray the initial costs
of administration, no income is recognized until the performance of a specific
funeral.

     Trust fund principal amounts and insurance contract amounts, together with
trust fund investment earnings retained in trust and annual insurance benefits,
are deferred until the service is performed. The Company estimates that trust
fund investment earnings and annual insurance benefits exceed the increase in
cost over time of providing the related services. Upon performance of the
specific funeral service, the Company will recognize the trust fund principal
amount or insurance contract amounts together with the accumulated trust
earnings and annual insurance benefits as funeral revenues. Costs relating to
the sale of pre-arranged funeral services, including sales commission expense,
are expensed in the period incurred.

     At-need funeral services revenues are recognized when the service is
performed.

Valuation of Long-Lived Assets

      Through December 31, 2001, the Company accounted for long-lived assets
under SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of. Recoverability of assets to be held and
used were measured by a comparison of the carrying amount of an asset to future
net cash flows expected to be generated by the asset. If such assets were
considered to be impaired, the impairment recognized was measured by the amount
by which the carrying amount of the assets exceeded the fair value of the
assets. Assets to be disposed of were reported at the lower of the carrying
amount or fair value, less costs to sell.

      January 1, 2002, the Company adopted SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. SFAS No. 144 addresses financial
accounting and reporting for the impairment or disposal of long-lived assets.
This Statement requires that long-lived assets be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of an asset to future net cash
flows expected to be generated by the asset. If the carrying amount of an asset
exceeds its estimated future cash flows, an impairment charge is recognized by
the amount by which the carrying amount of the asset exceeds the fair value of
the asset. SFAS No. 144 requires companies to separately report discontinued
operations and extends that reporting to a component of an entity that either
has been disposed of (by sale, abandonment, or in a distribution to owners) or
is classified as held for sale. Assets to be disposed of are reported at the
lower of the carrying amount or fair value less costs to sell.

Valuation of Goodwill

     Through December 31, 2001, the excess of purchase price over the fair value
of identifiable net assets acquired (goodwill) was being amortized by use of the
straight-line method over a 40-year period.

     January 1, 2002, the Company adopted SFAS 142, Goodwill and Other
Intangible Assets. Under SFAS 142, goodwill and intangible assets with
indefinite lives are no longer amortized but are reviewed at least annually for
impairment. There was no adjustment to goodwill upon the adoption of SFAS 142
due to the elimination of predecessor goodwill and the successor goodwill
recorded at the consummation of the change in ownership on December 31, 2001. As
a result of the adoption of SFAS 142, the Company did not record any
amortization expense of goodwill for the three months ended March 31, 2002. For
the three months ended March 31, 2001, goodwill amortization expense was $0.8
million.

                                        6

<PAGE>

3. NEW ACCOUNTING PRONOUNCEMENTS

     On June 29, 2001, the Financial Accounting Standards Board (FASB) approved
SFAS No. 141, "Business Combinations". SFAS No. 141 requires that the purchase
method of accounting be used for all business combinations initiated after June
30, 2001 as well as all business combinations completed after June 30, 2001. The
Company adopted the provisions of SFAS No. 141 during 2001. There was no
material impact associated with the adoption.

     On June 29, 2001, SFAS No. 142, "Goodwill and Other Intangible Assets" was
approved by the FASB. SFAS No. 142 changed the accounting for goodwill from an
amortization method to an impairment-only approach. Amortization of goodwill,
including goodwill from past business combinations, will cease upon adoption of
this statement. The provisions of SFAS No. 142 are effective for fiscal years
beginning after December 15, 2001 and must be adopted at the beginning of a
fiscal year. The Company adopted SFAS No. 142 effective January 1, 2002. There
was no adjustment to goodwill upon the adoption of SFAS No. 142 due to the
elimination of predecessor goodwill and the successor goodwill recorded at the
consummation of the change in ownership on December 31, 2001. As a result of the
adoption of SFAS No. 142, the Company did not record any amortization expense of
goodwill for the three months ended March 31, 2002. For the three months ended
March 31, 2001, goodwill amortization expense was $0.8 million.

     In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets", which supersedes both SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of", and the accounting and reporting provisions of APB
Opinion No. 30, "Reporting the Results of Operations--Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions" (Opinion 30), for the disposal of a segment
of a business (as previously defined in that Opinion). SFAS No. 144 retains the
fundamental provisions in SFAS No. 121 for recognizing and measuring impairment
losses on long-lived assets held for use and long-lived assets to be disposed of
by sale, while also resolving significant implementation issues associated with
SFAS No. 121. SFAS No. 144 retains the basic provisions of Opinion 30 on how to
present discontinued operations in the income statement but broadens that
presentation to include a component of an entity (rather than a segment of a
business). Unlike SFAS No. 121, an impairment assessment under SFAS No. 144 will
never result in a write-down of goodwill. Rather, goodwill is evaluated for
impairment under SFAS No. 142, "Goodwill and Other Intangible Assets".

     The Company was required to adopt SFAS No. 144 no later than the year
beginning after December 15, 2001. Accordingly, the Company adopted SFAS No. 144
effective January 1, 2002. The adoption of SFAS No. 144 for long-lived assets
held for use did not have a material impact on the Company's financial
statements because the impairment assessment under SFAS No. 144 is largely
unchanged from SFAS No. 121. The provisions of SFAS No. 144 for assets held for
sale or other disposal generally are required to be applied prospectively after
the adoption date to newly initiated disposal activities. Therefore, Management
cannot determine the potential effects that adoption of SFAS No. 144 will have
on the Company's financial statements.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
          OF OPERATIONS.

OVERVIEW

     Rose Hills Company, a Delaware corporation, is a wholly owned subsidiary of
RH Holdings. The Company was formed in 1996 for purposes of acquiring Roses,
Inc., the owner and operator of the Rose Hills Mortuary and purchasing certain
assets and assuming certain liabilities of Rose Hills Memorial Park Association
and Workman Mill Company, the owners of the real property and other cemetery
assets of the Rose Hills Memorial Park.

                                        7

<PAGE>

     In April 2001, the shareholders of RH Holdings reached an agreement
pursuant to which Blackstone, then the beneficial owner of 80.55% of the
outstanding common stock of the Company, would exercise its put right and the
minority shareholder, a reorganized Loewen, would acquire all of the stock of RH
Holdings owned by Blackstone upon Loewen's emergence from bankruptcy. The U.S.
Bankruptcy Court confirmed Loewen's reorganization plan, including the proposed
acquisition of shares of RH Holdings from Blackstone on December 5, 2001, and
the plan became effective on January 2, 2002. Effective with its emergence from
bankruptcy, Loewen has since been renamed the Alderwoods Group, Inc. Since the
U.S. Bankruptcy Court approved the reorganization plan on December 5, 2001, such
approval effectively obligated Blackstone and Loewen to consummate the put
agreement. Accordingly, the Company has recorded this transaction effective on
December 31, 2001.

     On January 3, 2002, in full satisfaction of its obligations under the put
arrangement, Alderwoods delivered to Blackstone unsecured, subordinated notes in
the aggregate principal amount of $24,678,571 and Alderwoods common stock with
an aggregate value of $6,515,143. As a result of the delivery of the
consideration, Alderwoods completed its purchase of all of the stock of RH
Holdings beneficially owned by Blackstone. Upon closing of the Alderwoods
Purchase Transaction, Alderwoods increased its ownership from 20.45% to 100% of
the outstanding common stock of RH Holdings, thereby causing the Company to
become a wholly owned subsidiary of Alderwoods. The shareholders agreement, and
all other agreements, between Alderwoods and Blackstone with respect to the
Company terminated as of the closing of the transaction, and Alderwoods became
entitled to elect all of the directors of the Company as of such date.

     For accounting purposes, the effective date for the change in control has
been determined by the Company as December 31, 2001. This is based upon the fact
that the U.S. Bankruptcy Court confirmed Loewen's reorganization plan, including
the proposed acquisition of the shares of RH Holdings from Blackstone on
December 5, 2001. Thus, Blackstone and Loewen were obligated under the put,
Accordingly, the Company recorded the push-down of Loewen fresh start reporting
in its Successor consolidated balance sheet as of December 31, 2001.

     Since the Company has pushed-down the fresh start reporting that occurred
as a result of Loewen's purchase of Blackstone's interest in the company, the
Company's Successor statement of operations and statement of cash flows for the
three months ended March 31, 2002 are presented on a different cost basis than
the Predecessor statement of operations and statement of cash flows for the
three months ended March 31, 2001. Therefore, such statments are not comparable.

     Rose Hills is the largest, single-location cemetery and funeral home
combination in the United States, and the Cemetery is the largest,
single-location cemetery in the United States. The Rose Hills Cemetery and the
Rose Hills Mortuary have been continuously operating since 1914 and 1956,
respectively. Rose Hills is situated less than 14 miles from downtown Los
Angeles on approximately 1,400 acres of land near Whittier, California. In
addition to Rose Hills, the Company operated 10 funeral homes, 2 funeral home
cemetery combination properties and one cemetery ("Affiliates") as of March 31,
2002. We believe that Rose Hills, together with the Affiliates, constitute a
strategic assembly of cemeteries and funeral homes in the greater Los Angeles
area.

                                        8

<PAGE>

CRITICAL ACCOUNTING POLICIES

Cemetery Revenue Recognition

     Pre-need sales of cemetery interment rights are recognized in accordance
with the guidance of Statement of Financial Accounting Standards (SFAS) No. 66,
Accounting for the Sales of Real Estate. Accordingly, sales of interment rights
are recognized under the full accrual method, the percentage of completion
method, or the deposit method depending on the level of the buyer's down payment
and any continuing involvement the Company has in developing sold property.
Direct and acquisition costs of the sales are deferred and recognized concurrent
with the recognition of deferred sales. Deferred sales are recognized at the
time of delivery of merchandise or performance of service.

     Allowances for anticipated customer cancellations and refunds are provided
at the date of sale based on management's estimate of expected cancellations
using historical trends. Actual cancellation rates in the future may result in a
change in estimate.

     Deferred merchandise and service sales, and their direct costs, are
recognized at the time of delivery of merchandise or performance of service.

     At-need sales of cemetery interment rights, merchandise and services are
recognized when the merchandise is delivered or the service is rendered.

     A portion of the proceeds from the sale of interment rights is required by
state law to be paid into an Endowment Care Fund to provide for the perpetual
care of the associated properties. Cemetery revenue is recorded net of these
amounts. Earnings of the Endowment Care Fund are used to defray the maintenance
costs of cemeteries. Additionally, pursuant to state law, the proceeds from the
sale of pre-need merchandise and services may also be required to be paid into
trust funds.

     It is the Company's policy to voluntarily trust 100% of pre-need service
revenue when contracts are paid in full. Also, the Company has an agreement with
a vendor to purchase pre-need merchandise when the sales contracts are paid in
full. Funds voluntarily trusted for pre-need cemetery services are included in
the consolidated financial statements.

Funeral Revenue Recognition

     Pre-arranged funeral services contracts provide for future funeral services
and are generally determined by prices prevailing at the time the contract is
signed. The payments made under the contract are either placed in trust or are
used to pay the premiums of third-party life insurance policies under which the
Company will be designated as beneficiary. The pre-need funeral insurance
policies sold by the Company are whole-life policies sold on a pre-need basis to
pay for the cost of funeral services. Commissions earned are based on a
combination of factors, such as the amount of funeral cost coverage sold, the
age of the insured and the volume of monthly sales activity. Insurance
commissions earned and related selling expenses are recognized when the
insurance company accepts the policies. Except for insurance commissions and
amounts not required to be trusted, which are used to defray the initial costs
of administration, no income is recognized until the performance of a specific
funeral.

     Trust fund principal amounts and insurance contract amounts, together with
trust fund investment earnings retained in trust and annual insurance benefits,
are deferred until the service is performed. The Company estimates that trust
fund investment

                                        9

<PAGE>

earnings and annual insurance benefits exceed the increase in cost over time of
providing the related services. Upon performance of the specific funeral
service, the Company will recognize the trust fund principal amount or insurance
contract amounts together with the accumulated trust earnings and annual
insurance benefits as funeral revenues. Costs relating to the sale of
pre-arranged funeral services, including sales commission expense, are expensed
in the period incurred.

     At-need funeral services revenues are recognized when the service is
performed.

Valuation of Long-Lived Assets

      Through December 31, 2001, the Company accounted for long-lived assets
under SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of. Recoverability of assets to be held and
used were measured by a comparison of the carrying amount of an asset to future
net cash flows expected to be generated by the asset. If such assets were
considered to be impaired, the impairment recognized was measured by the amount
by which the carrying amount of the assets exceeded the fair value of the
assets. Assets to be disposed of were reported at the lower of the carrying
amount or fair value, less costs to sell.

      January 1, 2002, the Company adopted SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. SFAS No. 144 addresses financial
accounting and reporting for the impairment or disposal of long-lived assets.
This Statement requires that long-lived assets be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of an asset to future net cash
flows expected to be generated by the asset. If the carrying amount of an asset
exceeds its estimated future cash flows, an impairment charge is recognized by
the amount by which the carrying amount of the asset exceeds the fair value of
the asset. SFAS No. 144 requires companies to separately report discontinued
operations and extends that reporting to a component of an entity that either
has been disposed of (by sale, abandonment, or in a distribution to owners) or
is classified as held for sale. Assets to be disposed of are reported at the
lower of the carrying amount or fair value less costs to sell.

Valuation of Goodwill

     Through December 31, 2001, the excess of purchase price over the fair value
of identifiable net assets acquired (goodwill) was being amortized by use of the
straight-line method over a 40-year period.

     January 1, 2002, the Company adopted SFAS No. 142, Goodwill and Other
Intangible Assets. Under SFAS No. 142, goodwill and intangible assets with
indefinite lives are no longer amortized but are reviewed at least annually for
impairment. There was no adjustment to goodwill upon the adoption of SFAS 142
due to the elimination of predecessor goodwill and the successor goodwill
recorded at the consummation of the change in ownership on December 31, 2001.
Application of the non-amortization provisions of SFAS No. 142 for goodwill
resulted in a $0.8 million increase in operating income for the first quarter of
2002 compared to the same period last year.

RESULTS OF OPERATIONS

The following table sets forth details of certain income statement data (in
millions):

                                       10

<PAGE>

                                                THREE MONTHS ENDED
                                                     MARCH 31
                                                 2001        2002
                                                ------      ------


     Sales and service:
        Funeral:
            Services and merchandise            $ 7.8        $ 7.6
            Insurance commissions                 0.9          0.8
            Disposed locations                    0.4           --
            Other                                 0.1          0.1
        Cemetery:
            Before-need                           3.6          4.2
            At-need                               4.4          4.4
            Endowment care                        1.0           .9
                                                -----        -----
     Total sales and services                   $18.2        $18.0

     Gross profit:
        Funeral sales and services              $ 2.7        $ 2.8
        Cemetery sales and services               1.5          2.2
        Disposed locations                        ---          ---
                                                -----        -----
     Total gross profit                         $ 4.2        $ 5.0

The following table sets forth certain income statement data as a percentage of
sales for the Company.

                                     THREE MONTHS ENDED
                                          MARCH 31
                                      2001        2002
                                     ------      ------
Sales and services:
 Funeral sales and services           50.3%       47.1%
 Cemetery sales and services          49.7%       52.9%
                                    ------      ------
 Total sales and services            100.0%      100.0%
Gross profit:
 Funeral sales and services           29.9%       32.6%
 Cemetery sales and services          15.8%       23.1%
 Total gross profit                   22.8%       27.6%
General and administrative
  expenses                             8.6%        9.1%
Goodwill amortization                  4.5%        0.0%
Interest expense                      21.4%       16.2%


THREE MONTHS ENDED MARCH 31, 2002 COMPARED TO THREE MONTHS ENDED MARCH 31, 2001

     Consolidated revenues for the quarter ended March 31, 2002 was $18.0
million compared to $18.2 million for the quarter ended March 31, 2001.
Consolidated gross profit for the first quarter of 2002 totaled $5.0 million
compared to $4.2 million for the first quarter of 2001. As a percentage of
revenue, consolidated gross margin percentage for the first quarter increased to
27.6% in 2002 from 22.8% in the same quarter 2001.

Funeral Operations:

     Revenue from funeral operations decreased 7.4% to $8.5 million compared to
$9.2 million for the quarter in the previous year. Excluding locations disposed
in June 2001, revenue decreased $0.3 million (3.0%) from the previous quarter.
On a same store basis, the Company performed 2,005 funeral service calls during
2002 compared to 2,073 in the first quarter of 2001. The affiliate funeral homes
experienced an 11.2% call decrease and 16.8% at-need revenue decrease, which was
partially offset by a 0.9% call increase and a 2.5% at-need revenue increase at
the Rose Hills funeral home. Management believes that the affiliate locations'
decrease in funeral service calls are due to new competitors in their markets.
Pre-need funeral revenue for the quarter was $0.8 million compared to $0.9
million in the same period last year. The operating margin for the funeral
segment increased $0.1 million from the previous year's quarter. As a percentage
of sales, the operating margin was 32.6% compared to 29.9% for the same quarter
last year. The improvement in the operating margin is primarily from the
disposal of

                                       11

<PAGE>

four poorly performing funeral homes in June 2001. The Company's funeral and
cemetery insurance and trust backlog increased $2.8 million, net of
fulfillments, in the first quarter of 2002 to $174.8 million.

Cemetery Operations:

     Revenue from cemetery operations for the quarter was $9.5 million,
representing a 5.5% increase from the same quarter in the prior year. Pre-need
cemetery revenue for the first quarter was $4.2 million compared to $3.6 million
for the same quarter during the prior year, an increase of 19.4%. The number of
pre-need property units sold during the first quarter of 2002 was 1,727,
compared to 1,161 units during the first quarter of 2001, an increase of 48.8%,
and was primarily responsible for the increase of pre-need cemetery revenue in
the first quarter of 2002 over the same quarter of 2001. In the first quarter of
2001, there were management and personnel changes in the sales department that
adversely affected the pre-need sales during that quarter; management believes
that the stability within the sales department over the last nine months
contributed to the increase in the number of pre-need property units sold
compared to the first quarter of 2001. A decrease in the average property sales
price per unit partially offset the increase of pre-need property units sold.
At-need cemetery revenue was $4.4 million for the first quarter of 2002 and
comparable to last year. Total interments were 2,679 for the quarter, which
represented a 4.1% increase over the same quarter in the prior year. At-need
cemetery revenue realized for the current quarter did not increase at the same
rate as the number of interments from the previous year due to the reduction of
deferred revenues which are now being recognized. The reduction in deferred
revenues resulted from the "fresh start" accounting adjustment at the
consummation of the Alderwoods Purchase Transaction.

     The operating margin for the cemetery segment during the quarter increased
from 15.8% last year to 23.1% as a percentage of sales. The primary reason for
the improvement in margin is a $0.7 million timing difference in advertising
expense compared to 2001. In March 2001, the Company launched a $1.0 million
advertising campaign in an attempt to increase customer awareness and improve
both funeral and cemetery market share.

Other:

     Corporate general and administrative expense was $1.6 million for the
quarters ended March 31, 2001 and 2002. Interest expense for the first quarter
of 2002 was $2.9 million; $1.0 million less than the previous year's quarter as
a result of favorable interest rates during the current quarter and the
reduction of principal from the previous year.

     EBITDA, earnings before interest, taxes, depreciation and amortization
(including cemetery property amortization included in cost of sales), increased
to $5.5 million for the quarter ended March 31, 2002 from $5.0 million for the
quarter ended March 31, 2001. The increase from 2001 was primarily a result of
increased pre-need cemetery property sales. EBITDA should not be considered in
isolation, as a substitute for net income or cash flow data prepared in
accordance with accounting principles generally accepted in the United States of
America or as a measure of a company's profitability or liquidity.

LIQUIDITY AND CAPITAL RESOURCES

         The Company presently believes that, based upon current levels of
operations and anticipated growth (in pre-need cemetery property sales) and the
availability of the Bank Revolving Facility (see description below), it can meet
working capital and short-term liquidity requirements for current operations,
satisfy its contingent obligations and service its indebtedness through March
31, 2003.

     Net cash provided by operating activities was $3.6 million for the quarter
ended March 31, 2002, compared to $4.4 million for the same period in 2001.
Excluding the $2.5 million Alderwoods Purchase Transaction bonus award payment,
the cash provided by operating activities would have increased $1.7 million to
$6.1 million for the first quarter of 2002.

                                       12

<PAGE>

     The primary use of cash will be for working capital, principal payments on
outstanding long-term indebtedness and capital expenditures as permitted under
the terms of bank agreements. Although the Company has no material commitments
for capital expenditures, the Company anticipates capital expenditures of
approximately $3.3 million for the year, which includes $2.3 million in internal
growth initiatives, including cemetery property development, and $1.0 million
for maintenance capital expenditures.

     In connection with its formation in 1996, the Company entered into senior
secured amortization extended term loan facilities (the "Bank Term Facility") in
an aggregate principal amount of $75.0 million, the proceeds of which were used
to finance the 1996 acquisition and related transaction costs, to pre-fund
certain capital expenditures and to refinance existing indebtedness of the
Company, and a senior secured revolving credit facility (the "Bank Revolving
Facility") in an aggregate principal amount of up to $25.0 million , the
proceeds of which are available for general corporate purposes and a portion of
which may be extended (as agreed upon) in the form of swing line loans or
letters of credit for the account of the Company. Effective May 2, 2001 the
Company amended the Bank Revolving Facility reducing the aggregate principal
amount available to $10.0 million and extending its maturity date to April 1,
2003. Borrowings under the Revolving Credit Facility must be fully paid for a
minimum period of 30 days for each 12-month period ending December 1. As of May
14, 2002, the Company had no borrowings under the Revolving Credit Facility;
accordingly, any borrowings during the remaining months in 2002 will not be due
until April 1, 2003 when the Revolving Credit Facility expires.

     The Bank Term Facility is payable, subject to certain conditions, in
semi-annual installments in the amounts of $9.0 million in 2002, $26.0 million
in May 2003 and $26.0 million upon maturity of the Bank Term Facility in
November 2003.

     All obligations under the Bank Credit Facilities entered into with the
lenders or their affiliates in connection therewith are unconditionally
guaranteed (the "Bank Guarantees"), jointly and severally, by Rose Hills
Holdings Corp. and each of the Company's existing and future domestic
subsidiaries (the "Bank Guarantors"). All obligations of the Company and the
Bank Guarantees are secured by first priority security interests in all existing
and future assets (including real property located at Rose Hills but excluding
other real property and vehicles covered by certificates of title) of the
Company and the Bank Guarantors. In addition, the Bank Credit Facilities are
secured by a first priority security interest in 100% of the capital stock of
the Company and each subsidiary thereof and all intercompany receivables.

     In connection with its formation in 1996, the Company also issued $80
million of 9-1/2% Senior Subordinated Notes due 2004, which were exchanged in
September 1997 for $80 million of 9-1/2% Senior Subordinated Notes due 2004 (the
"Notes") that were registered under the Securities Act of 1933. The Notes mature
on November 15, 2004. Interest on the Notes is payable semi-annually on May 15
and November 15 at the annual rate of 9-1/2%. The Notes are redeemable in cash
at the option of the Company, in whole or in part, at any time on or after
November 15, 2000, at prices ranging from 104.75% with annual reductions to 100%
in 2003 plus accrued and unpaid interest, if any, to the redemption date. The
proceeds of the Notes were used, in part, to finance the Company's formation in
1996.

     As a result of its formation in 1996 and the application of proceeds
thereof, the Company's total outstanding indebtedness was approximately $143.2
million as of March 31, 2002. Management currently believes that, based upon
current levels of operations, anticipated growth and the availability under the
Bank Revolving Facility, it can adequately service its existing indebtedness
through March 31, 2003. If the Company cannot generate sufficient cash flow from
operations or borrow under the Bank Revolving Facility to meet such obligations,
the Company may be required to take certain actions, including reducing capital
expenditures, restructuring its debt, selling assets or seeking additional
equity in order to avoid an Event of Default. There can be no assurance that
such actions could be effected or would be effective in allowing the Company to
meet such obligations.

                                       13

<PAGE>

     The Company currently expects that it will have to obtain new or additional
financing to pay some or all the principal amount due at maturity under the Bank
Term Facility and under the Notes ($80 million on November 15, 2004). No
assurance can be given that such financing will be available to the Company or,
if available, that it may be obtained on terms and conditions that are
satisfactory to the Company. Further, the Company does not expect Alderwoods to
provide additional liquidity in the form of capital contributions or loan
guarantees. Under the terms of certain Alderwoods debt agreements, Alderwoods is
prohibited from guaranteeing the Company's debt or contributing capital.

     The Company and its Subsidiaries are subject to certain restrictive
covenants contained in the indenture to the Notes, including, but not limited
to, covenants imposing limitations on: the incurrence of additional
indebtedness; certain payments, including dividends and investments; the
creation of liens; sales of assets and preferred stock; transactions with
interested persons; payment restrictions affecting subsidiaries; sale-leaseback
transactions; and mergers and consolidations. In addition, the Bank Credit
Facilities contain certain restrictive covenants that, among other things, limit
the ability of the Company and its subsidiaries to dispose of assets, incur
additional indebtedness, prepay other indebtedness (including the Exchange
Notes), pay dividends or make certain restricted payments, create liens on
assets, engage in mergers or acquisitions or enter into leases or transactions
with affiliates. At March 31, 2002 the Company was in compliance with the terms
of the indenture and the Bank Credit Facilities.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     The Company's market risk is impacted by changes in interest rates.
Pursuant to the Company's policies, and depending on market conditions, the
Company may utilize derivative financial instruments (such as interest rate
collar agreements) from time to time to reduce the impact of adverse changes in
interest rates. The Company does not use derivative instruments for speculation
or trading purposes, and has no material sensitivity to changes in market rates
and prices on its derivative financial instrument positions. The Company did not
have any such agreements or instruments in place as of March 31, 2002.

PART II

ITEM 5 - OTHER INFORMATION

CONTINGENCIES

      The Company is involved in certain matters of threatened and filed
litigation, none of which, in the judgment of the Management, will have a
material impact on the Company's consolidated financial position or results of
operations.

      Environmental audits of the Company's various properties were conducted in
connection with the Company's formation. Management is aware of certain areas
within the Cemetery that have required and may in the future require
remediation, including a solid waste disposal area that previously was used to
dump rubbish, green waste and used motor oil in the 1970's. The Company believes
that Rose Hills Foundation (the "Foundation"), an unaffiliated company that is
the successor to the Association, is obligated to pay for or otherwise indemnify
the Company for the remediation costs associated with this area pursuant to the
terms of an Environmental Compliance Agreement entered into at the Company's
formation in 1996. To date, the Foundation has taken charge of the investigation
and remediation of the areas, including installing a cap on the area. In the
past the Company and the Foundation have disagreed about the amount of work
required to remedy the situation. As a result, the Company retained its own
outside technical consultant to further investigate the solid waste disposal
area to determine what risks, if any, the solid waste disposal area poses for
the Company, and to quantify such risks. The Foundation has recently submitted a
report, which incorporated the findings of the Company's consultant, to the
local regional water quality control board (Water Board), concluding that the
capping has been successful and requesting that The Water Board issue a closure
letter for the disposal area. The Water Board is the agency overseeing the
remediation. However, no assurance can be given that the Water Board will agree
with the Foundation's conclusions and issue a letter closing the area, or
whether the Water Board will require additional work or monitoring.

                                       14

<PAGE>

      In addition, two of the Company's cemetery properties are located in or
near areas of regional groundwater contamination. The Company submitted
information in connection with contamination at one of these areas and was
informed by the Environmental Protection Agency that the Company will not be
included in the Super Fund cleanup of the basin.

      Although there can be no assurance, Management does not believe that the
above or other environmental matters affecting the Company will have a material
adverse effect on the Company's financial condition or results of operations.

      During August and September 2000, the Company discovered that there had
been some land movement in a portion of Rose Hills Cemetery. The affected area
represents approximately 13 acres of the Cemetery's approximately 1,400 total
acres, and consists of approximately 12,000 interment sites. The Company hired
outside geo-technical and engineering consultants to study the affected area, to
identify the underlying cause and the extent of the land movement, and to make
recommendations with regard to both short-term and long-term remediation and
stabilization measures. Pending the Company's receipt of the engineer's report,
the Company undertook various remediation measures including the installation of
additional dewatering wells to improve water drainage conditions in the affected
area.

      The Company's consultants advised that the affected area could continue to
move, particularly in the event of heavy rainfall during the winter months.
Accordingly, during October 2000, the Company began to take some intermediate
remediation measures, including the installation of additional dewatering wells
in the affected area and the relocation to other areas of the Cemetery (at the
Company's expense) of approximately 140 interred remains that were in the most
severely impacted portion of the affected area. Such expenses could increase if
significant further movement is detected in the affected area or if additional
families request the relocation of interred remains from the affected area. As
of March 31, 2002, the Company had relocated, at its expense, approximately 975
interred remains from the affected areas to other areas of the Cemetery.

     The engineering firm delivered a preliminary report to the Company in July
2001. In the preliminary report, the engineers advised the Company that the land
movement most likely had been caused by a combination of geologic, topographic,
water and soil conditions within the affected area. The preliminary report also
identified a variety of measures that the Company could take to remediate and
improve the stability of the land area, including the construction and
installation of engineered reinforcement fill berms at the base of the slide,
the installation of horizontal and other additional drains throughout the
affected area, and the implementation of other erosion control measures. In
October 2001, the engineering firm completed additional tests and revised their
initial recommendation to include de-watering wells instead of horizontal
drains.

      Based upon additional tests and analysis performed in October 2001, the
engineering consultants advised that a combination of the remediation measures
discussed above can restore the affected area to a condition suitable for
interments. The Company's management is continuing to confer with the
engineering consultants to determine the appropriate combination and timing of
remediation measures that will restore the affected area to achieve such a
result. In the first quarter of 2002, the Company began its remediation of the
affected area by installing de-watering wells. The Company will likely implement
the remaining measures in stages by continuing to install de-watering wells,
erosion control measures and related improvements, begin relocating interred
remains in the third quarter of fiscal 2002, and begin the construction and
installation of the reinforcement fill berms beginning in the third quarter of
fiscal 2003.

      The estimated aggregate construction and related costs to restore and
stabilize the affected area will be approximately $3.2 million. The Company
expects to incur approximately $0.5 million of these costs during the remainder
of fiscal 2002, with the balance to be incurred during the last two quarters of
fiscal 2003. The Company also believes that the total direct costs of relocating
interred remains for the affected areas to other areas of the Cemetery will
approximate $1.0 million.

                                       15

<PAGE>

      To the extent that funds are available, the Company intends to seek
reimbursement from the improvement reserve in the Company's Endowment Care Fund
(ECF) for the costs of relocating interred remains and for a significant portion
of the site assessment, repair, maintenance and remediation costs associated
with the affected area. Between October 2000 and March 31, 2002, the Company
incurred $2.3 million and had been reimbursed from the ECF reserve $1.1 million
of direct costs relating to the relocation of interred remains and professional
and other services associated with the assessment, remediation and stabilization
of the affected area. As of March 31, 2002, the ECF has $1.8 million in reserves
for cemetery improvements available to reimburse the Company for direct costs
related to the affected areas.

      Based on the additional test results, revised estimates provided by the
engineering firm during third quarter of 2001, and the amounts available in the
ECF improvement reserve fund, the Company recorded a $3.0 million reserve for
these matters as of December 31, 2001.

      In connection with the Company's formation in 1996, the Rose Hills
Memorial Park cemetery land was subject to a significant step-up in assessed
value by the County of Los Angeles. Prior to 1996, the Cemetery was operated as
a not-for profit corporation and was largely exempt from property taxes. In
connection with its formation in 1996, the Company obtained an independent
appraisal of the fair value of the undeveloped and unsold cemetery property. In
early 1998, the Company also engaged an independent property tax consultant to
prepare an estimate of the fair value of the property to assist in the process.

      In July 2000, the County of Los Angeles completed its property tax
reassessment reflecting its opinion of the fair value of Rose Hills' cemetery
property at the time of the 1996 acquisition. The County placed a fair value on
the cemetery property that is approximately 60% higher than the independent
appraisal prepared by the property tax consultant and approximately 50% higher
than the fair market value computed by the independent appraiser at the time of
the 1996 acquisition. The Company filed an assessment appeal with the Los
Angeles County Assessor, however, the supplemental property tax based on the
reassessment must be paid during the appeal process. The total supplemental
property tax assessed by the County for the period November 1996 to March 2002
is approximately $2.1 million greater than the amount accrued by the Company
using the independent property tax appraisal. A large portion of the
supplemental tax bill is payable, interest-free, over four years.

      The Company believes, based in part on the advice of its property tax
advisors, that it can obtain a significant reduction in assessed value during
the appeal process. The Company is currently in discussions with representatives
of the Los Angeles County Assessor's Office and expects to come to a final
resolution in June 2002. However, there is no assurance that the appeal will
succeed. In the event the Company does not prevail upon appeal, the Company will
pursue other administrative procedures, including filing for a reduction in
assessed value under California's Proposition 8, which requires the County to
reduce assessed values when declines deemed other than temporary occur.

FORWARD-LOOKING STATEMENTS

     Certain statements in this Quarterly Report on Form 10-Q include "forward-
looking statements" as defined in Section 21E of the Securities Exchange Act of
1934. All statements other than statements of historical facts included herein,
including, without limitation, the statements under Item 2 "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
regarding the Company's financial position and its plans to increase revenues
and operating margins, reduce

                                       16

<PAGE>

general and administrative expenses, take advantage of synergies, and make
capital expenditures, and the ability to meet its financial obligations, are
forward-looking statements. Although the Company believes that the expectations
reflected in such forward-looking statements are reasonable, it can give no
assurance that such expectations will prove to be correct. Important factors
that could cause actual results to differ materially from the Company's
expectations include those which have been disclosed herein and in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2001. Persons
should review the factors identified herein and in the Company's Form 10-K to
understand the risks inherent in such forward-looking statements.

     All subsequent written and oral forward-looking statements attributable to
the Company or persons acting on its behalf are expressly qualified in their
entirety by the qualifications in the preceding paragraph.

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

     None.








SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

             ROSE HILLS COMPANY


             /s/ KENTON C. WOODS
             -------------------
             Kenton C. Woods
             Executive Vice President Finance and Chief Financial Officer,
             Secretary and Treasurer
             (Duly Authorized Officer and Principal Financial Officer)



May 14, 2002

                                       17